Gambling via satellite proposed - Sunday 12th of June 2005

A company that has patented a way to make casino-style gambling available via satellite is courting Indiana and its riverboats as the hosts of its games, promising millions of dollars in state revenue.Kenilworth Systems Corp., based in Mineola, N.Y., says its Roulabette product is specifically designed to meet state and federal laws that prohibit most interstate wagering and gambling on the Internet.It could allow gamblers in states or countries that approve it to wager from home or other locations on casino action in Indiana.The administration of Gov. Mitch Daniels is somewhat skeptical of the proposal, said State Budget Director Chuck Schalliol.

He called it "only an idea at this stage," not something the state has committed to seriously consider.But a provision slipped into a bill by Senate Appropriations Committee Chairman Bob Meeks, R-Lagrange, in the legislature's waning days requires the Indiana Gaming Commission to investigate "alternative forms of gaming" that would be beneficial for the state.Meeks acknowledged that he had the Roulabette option in mind when he wrote it. The commission's study would include an examination of the company's troubled financial past, which includes an extended bankruptcy."I prefer not to talk in detail about it," Meeks said last week. "I don't want to force the issue.

I want the gaming commission to look at it, to tell us if this is an up-and-up company."He said the commission also should consider other new gambling options. But he said Roulabette could mean "an awful lot of money" for Indiana's cash-strapped budget.Closer scrutiny to comeThe gaming commission's executive director, Ernest Yelton, said his agency has taken a "superficial" look at the company and its proposal. He said it will complete the more thorough examination by Oct. 1, as required by the law.The company, however, has already announced publicly that it "expects the first of several television simulcast casino broadcasts to originate from an Indiana" casino."The fact that this bill passed in Indiana is a big step," Kenilworth Senior Vice President Andrew Hirko said last week. "We are working in other jurisdictions to get more specific legislation. But this is a big public step."The company wants to broadcast live images of roulette, baccarat and other casino games to gamblers' homes through a microprocessor on a TV receiver box or to racetracks, off-track betting parlors, lottery locations, hotels or other places that another state or country might authorize.Gamblers would wager within their jurisdictions, rather than with the host casino.

That means the gambling would not violate rules against interstate gambling, Hirko said. Instead, it would be similar to horse racing simulcasts, in which a track sends its signal to an off-track betting center, where customers wager locally, and to TVG, the at-home horse wagering service.Also, he said, the gaming would be broadcast by satellite, so it would not violate the 1961 U.S. Wire Act or state bans on Internet wagering.Yelton, however, said questions remain about the Roulabette system's legality, something his agency would examine.Kenilworth, which has had no revenue from operations for the past 12 years and emerged from bankruptcy in 1998, estimates that Roulabette eventually could generate $40 billion to a staggering $500 billion annually in worldwide gambling "win," the wagering revenue left after prizes are paid out.

That figure is based in part on estimates of illegal Internet gambling as well as the reach of cable systems, lotteries and off-track betting parlors that might carry the broadcasts.According to a presentation prepared by the company, 70 percent of Roulabette revenues will be shared with the state governments, lotteries, betting parlors and casinos that participate.It's not clear, however, how much money that could mean if Indiana authorized the company to allow a broadcast from one of the casinos in the state."The terms are all to be negotiated," Hirko said. "We feel it could be lucrative, since the casino and the state would share in the net win. Plus, broadcasting from an Indiana casino would give them exposure and marketing."No assurancesThe company estimates it will need $10 million to launch the satellite-wagering project. But it warns, in a quarterly filing with the federal Securities and Exchange Commission, that "there are no assurances we will ever be able to obtain such money.""At present, the company does not have the funds readily available but hopes to obtain same, from investors, as soon as Kenilworth can commence broadcasting from a casino in the United States or other casinos throughout the world," the filing said.Kenilworth shares are sold in the Pink Sheets, a market for thinly traded stocks that are often considered riskier by analysts. On Thursday its shares were trading for 17 cents.The gaming commission plans to hire Purdue University economist Charlene Sullivan to study the company and its financial situation as if it's applying for a casino license in the state, Yelton said. That involves a rigorous examination of the company's leadership.

In preparation for such an investigation, Kenilworth's chairman and inventor of the Roulabette concept, Herbert Lindo, has resigned from the company.Lindo was convicted in 1993 in federal court of three felony violations of the Securities Act of 1933, according to documents filed with the SEC. He was sentenced to 1,000 hours of community service and 15 months of house arrest, and fined $600,000.Since then Lindo has acknowledged that those convictions would likely prevent the company from ever being licensed to conduct a gambling activity in any state. For years, though, the company said Lindo would remain on board to develop the product.

Last month, as some Indiana lawmakers were beginning to talk quietly about the Roulabette proposal, Lindo resigned and the board of directors named the company's chief executive officer, Gino Scotto, to hold both positions.In a letter the company said it sent to Meeks in April, Scotto reported, "Mr. Lindo agreed to place his stock into a 'lock box' or whatever is necessary to gain approval from" the gaming commission.The letter also mentions the Blue Chip casino in Michigan City as a possible host of the broadcasts, which it said would be made available only outside Indiana.But Rob Stilwell, vice president of corporate communications for Blue Chip's owner, Boyd Gaming, said, "We don't have any type of agreement with that company." He said the companies are not negotiating, although he acknowledged Kenilworth had contacted Boyd about the idea.

"We get lots of calls every day about new games, new equipment," Stilwell said. "I would put it along the lines of those types of calls."Kenilworth is not just looking at Indiana. It has lobbyists in other states as well, Hirko said.The company has presented its idea in Nevada, where a bill to authorize it was introduced in 2003 but did not pass.

www.courier-journal.com

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